Fierce BWA bid likely as big telcos miss out on pan-India slot

Written by Rachana Khanzode | Mumbai | Updated: May 22 2010, 02:05am hrs
With the major Indian telecom operators including Bharti Airtel, Reliance Communications and Aircel, missing out on the pan-India 3G spectrum licence and bagging a maximum of 13 circles, the industry could see another set of fierce bidding in the BWA auctions, starting this Saturday. BWA spectrum is necessary for rolling out Worldwide Interoperability for Microwave Access (WiMAX) services and enable hand-held devices and laptops access the Internet. The base price for one pan-India slot for WiMAX service has been fixed at Rs 1,750 crore, half of the base price for 3G. About 11 operators are participating in the BWA bidding process (for two slots) which is more than 9 operators that bid for the 3G licensing process (for three slots).

Neeraj Jain, director, strategic and commercial intelligence, transaction services, KPMG, said, Since the some telecom operators that have missed out on key circles, BWA auctions could emerge out another opportunity to grab additional spectrum. We might see some irrational bidding for these licenses too. Prashant Singhal, telecom industry analyst with Ernst & Young, said, Most of the bidders still have a capacity to leverage their balance sheets. At the same time as the BWA spectrum is available only in two slots we could see another round of fierce bidding. However, we do not expect operators to bid for pan-India license and it could be similar spread as in 3G, he added. More so the spread of spectrum license amongst the limited operators is expected to bring better mutually beneficiary arrangement between the operators. The cross-pollination of services will be evident now in a bid to offer seamless services to consumers, added Jain.

We see greater potential for JVs and the sharing of active/passive infrastructure in the coming months that could bring down rollout costs, said, Sachin Salgaonkar, analyst at Goldman Sachs, in a report.

In the recent 3G auctions, operators like Idea Cellular, Tata Teleservices and Aircel that missed out on major circles are believed to bid aggressively in these circles. Gurdeep Singh, COO at Aircel, said, We might consider it (bidding fiercely). BWA is critical technology for large corporate as well as SMEs (small and medium enterprises), so it can be a huge opportunity in major circles. Sanjeev Aga, MD at Idea refused to add any views on the BWA auctions.